IRS News Weekly Update
New Rules for Tax-Exempt Organizations and Clean Energy Credits
The IRS has issued new rules for tax-exempt organizations and state/local governments claiming certain clean energy credits. These organizations can now choose to treat these credits as a direct payment against their tax liabilities, instead of a non-refundable credit. This means they can get a refund for any excess credit amount.
The new rules also apply to a limited number of other taxpayers who choose to be treated as tax-exempt organizations for this purpose.
Key Points
This applies to tax years after December 31, 2022.
Organizations must pre-register using the IRS tool before making this election.
The IRS is seeking additional comments on how this applies to transferred clean energy credits.
The IRS Wants Taxpayers to Report All Their Income, Including Gig Work, Crypto, and Foreign Earnings
The IRS is reminding everyone to report all income earned in 2023, including income from:
Digital assets (cryptocurrency): Even if the taxpayer just held crypto, they need to answer a question on their tax return. If they sold, traded, or received crypto in exchange for goods or services, they will need to report that income as well.
Gig economy: Income from driving for Uber, selling crafts online, or other on-demand work is taxable and must be reported, even if you received a 1099 form or the income was paid in cash or digital assets.
Service industry tips: All tips, whether cash or non-cash, are generally taxable and should be reported to your employer or on your tax return.
Foreign income: U.S. citizens and resident aliens must report income from all over the world, including earned income (wages) and unearned income (interest, dividends).
For more information, visit the IRS website to read the full press release.
Tax Preparers Can Help Clients Clarify Proper Use of Their Health Savings Accounts and Other Tax-Favored Health Plans
The IRS is warning taxpayers that some companies are misleading people about what expenses can be paid for with health spending accounts (HSAs), FSAs, HRAs, and MSAs. These accounts allow you to use pre-tax dollars for qualified medical expenses, but things like gym memberships and healthy groceries don't count.
Even with a doctor's note, general health and wellness expenses aren't considered medical expenses by the IRS. So if a company tells your client a doctor's note can magically turn their groceries into reimbursable medical costs, it's probably a scam.
Using their health spending account for non-medical expenses can disqualify their entire plan and make all the money in it taxable.
Adding value to your services by providing clients with advice on these types of issues can turn them into loyal customers and gain you referrals for next tax season.
Review IRS Publication 9969 "Health Savings Accounts and Other Tax-Favored Health Plans" for use in preparing 2023 returns.
IRS Offers Relief for Dyed Diesel Use in Texas After Wildfires
Due to wildfire disruptions to the diesel fuel supply, the IRS is waiving penalties for using dyed diesel fuel in certain Texas counties. This applies to dyed diesel with a sulfur content under 15 ppm used in highway vehicles between February 23rd and March 22nd, 2024.
Here's what you need to know:
This applies to Archer and 54 other Texas counties (listed in the press release).
Operators must pay the usual 24.4 cents-per-gallon tax on undyed diesel.
Relief extends to those who didn't make the usual tax deposits for dyed diesel during this period.
The IRS is monitoring the situation and may offer further relief.
Disclaimer: This article is for informational and educational purposes only and does not constitute legal tax advice. Advanced Tax Solutions is not liable or responsible for any damages resulting from or related to your use of this information. It is your responsibility to refer to official IRS documentation for information regarding any tax laws or tax information shown here.
